Using the most recent pricing for the products, determine the extended cost of end-of-year inventories. Subtract number one from number two.
Dollar-value According to LIFO, all items are grouped into pools that are valued at their total dollar amount, and any increases or decreases to those pools are also valued at their total dollar amount. In contrast to the particular goods pooled LIFO method, which limits businesses to, for example, placing only significantly related items into a pool, the dollar-value LIFO approach enables them to deposit a greater number of goods into a single pool.
Companies who retain a big number of items and anticipate that their product mix may change significantly in the future are those that adopt the dollar-value LIFO strategy. Companies can avoid determining individual pricing layers for each inventory item by using the dollar-value LIFO method. Alternatively, they can figure out layers for each inventory pool. However, there comes a point where this is no longer economical, therefore it's important to make sure that pools aren't being built pointlessly.
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